Margin and VAT Calculator
Calculate profit margins, pricing, and VAT for European business transactions
Calculate Margin and VAT
Cost of goods/services excluding VAT
Value Added Tax percentage
Profit margin percentage
Calculation Results
VAT Breakdown
VAT on Cost:
€0.00
VAT on Price:
€0.00
Margin Analysis
Margin = (Profit ÷ Net Price) × 100 = (€0.00 ÷ €0.00) × 100
Formulas Used
Gross Cost: Net Cost × (1 + VAT Rate%)
Net Price: Net Cost ÷ (1 - Margin%) or Net Cost × (1 + Markup%)
Gross Price: Net Price × (1 + VAT Rate%)
Profit: Net Price - Net Cost
Margin: (Profit ÷ Net Price) × 100
Markup: (Profit ÷ Net Cost) × 100
Example Calculation
European Retail Example
Product: Consumer electronics
Net Cost: €100.00
Desired Margin: 40%
VAT Rate: 20% (UK Standard Rate)
Calculation Steps
Gross Cost = €100.00 × (1 + 20%) = €100.00 × 1.2 = €120.00
Net Price = €100.00 ÷ (1 - 40%) = €100.00 ÷ 0.6 = €166.67
Gross Price = €166.67 × (1 + 20%) = €166.67 × 1.2 = €200.00
Profit = €166.67 - €100.00 = €66.67
Markup = (€66.67 ÷ €100.00) × 100 = 66.67%
VAT on Cost = €120.00 - €100.00 = €20.00
VAT on Price = €200.00 - €166.67 = €33.33
Common VAT Rates
Note: Reduced rates may apply for certain goods and services
Margin vs Markup
Margin
Percentage of selling price that is profit
Formula: (Profit ÷ Selling Price) × 100
Markup
Percentage added to cost to get selling price
Formula: (Profit ÷ Cost) × 100
Key: Margin is calculated on selling price, markup on cost
Understanding Margin and VAT Calculations
What is VAT?
Value Added Tax (VAT) is a consumption tax levied on most goods and services sold for domestic consumption. It's commonly used in European Union countries and many other nations worldwide.
How to Calculate VAT
- 1.Determine the net amount (before VAT)
- 2.Find the applicable VAT rate
- 3.Multiply net amount by (1 + VAT rate)
- 4.The result is the gross amount including VAT
Business Pricing Strategy
- •Consider VAT impact on final customer price
- •Account for both cost and selling price VAT
- •Monitor competitor pricing including VAT
- •Understand VAT registration thresholds
Business Tip: VAT-registered businesses can typically reclaim VAT on business purchases
Key Formulas
VAT Calculations
- Gross Cost: Net Cost × (1 + VAT Rate%)
- Gross Price: Net Price × (1 + VAT Rate%)
- VAT Amount: Net Amount × VAT Rate%
Profitability Formulas
- Profit: Net Price - Net Cost
- Margin: (Profit ÷ Net Price) × 100
- Markup: (Profit ÷ Net Cost) × 100